Directors at national adviser AFH Financial Group have agreed terms for a £225m takeover offer from a US private equity firm.

This Monday (January 25) Cortina Bidco, a newly incorporated company indirectly controlled by US private equity firm Flexpoint Ford, confirmed its multi-million pound acquisition offer for AFH.

At 463 pence in cash for each scheme share, the acquisition values the national IFA’s entire share capital at £224.5m.

AFH’s independent directors confirmed they intended to unanimously recommend shareholders vote in favour of the deal, which they said was “fair and reasonable”.

AFH, which has funds under management of £6.2bn, is currently listed on the London Stock Exchange’s Aim.

John Wheatley, chairman of AFH, said Flexpoint and Bidco would be “excellent partners” and the acquisition was “in the best interests of all stakeholders of the group”.

AFH, which floated in 2014, said its access to both equity capital and debt funding for “growth on reasonable terms and in a timely manner” had faced challenges in recent years.

It said this had slowed the company’s growth “meaningfully relative to those privately-owned competitors which have been able to scale their businesses, both organically and through M&A, at a faster pace”.

AFH said its independent directors believed the deal, which is subject to regulatory approval, was the “most attractive route for AFH to regain its growth trajectory”.

Executive directors at the advice firm have agreed to stay on in their current roles following completion of the acquisition.

Alan Hudson, chief executive of AFH, said: “The executive directors and I have always sought to deliver on our strategy of organic and M&A-led growth, but in recent years this has been curtailed by being an Aim-quoted company.

“We believe the offer reflects our strong track record of increasing shareholder value, Flexpoint’s endorsement of our strategy and confidence in the continued success of AFH, as well as further investment required in the business.”

In annual results published earlier this month AFH said it was on the hunt for valuable buying opportunities in 2021, having pulled out of the acquisition market for much of 2020 due to the coronavirus pandemic.

Private equity investment has become a prominent theme in the wealth management landscape in recent years.

Steven Begleiter, managing director of Flexpoint, said: “We believe that the UK wealth management market is currently undergoing an important transition, as regulatory and demographic trends are driving increasing demand for high quality financial advice that can be met by IFA firms with a long-term and client-centric view.

“In addition, the market is highly fragmented, which provides an opportunity to service customers better and create value through consolidation.”

Last year Hurst Point Topco Limited, backed by private equity parent Carlyle, bought financial advice firm Harwood Wealth Management for £91m.

Private equity has also snapped up companies associated with the business of financial advice, with platform Novia bought by Anacap in December.


Source: Financial Times

By Rachel Mortimer

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